Sensex EPS for FY11 and Sensex Target

masterandstudent-epsIt is earnings season again and various institutions and brokerages have come out with their Earnings forecast for Sensex 30 companies for FY11. Most of them have come out with their estimates in the range or Rs.1100-Rs.1250 for FY11 and Sensex target of about 21000, which is about 20% up from current levels of 18k.

Number crunching:
CLSA – FY 11 EPS Rs 1,046.
Morgan Stanley – FY 11 EPS Rs 1,232.
Deutsche Bank – FY 11 EPS Rs 1,10.
UBS – FY 11 EPS Rs 1,146.
Edelweiss – FY 11 EPS Rs 1,080.
Merrill – FY 11 EPS Rs 1,100.

What does these numbers indicate for an investor?

Looking at the above numbers , the consensus EPS is around Rs.1100 and the Sensex at the higher P/E band of 20, would be at 21k, which is not totally unjustified considering higher growth and EPS for the year FY12.Hence any sharp decline would be a buying opportunity, particularly below 15 times forward earnings i.e., below 15k.

But this correction isn't coming yet and keeps elusive.Instead of timing the market, one could always look for investments in Mutual Funds through SIP route, so that one need worry about ups and downs of the markets and still be able to gain in the markets.